Northland Resources withdraws bond offering, seeks bridge instead

By Angela McDaniels

Tacoma, Wash., May 24 - Northland Resources AB withdrew its senior secured bond offering and will instead establish a new bridge facility, according to a company news release.

Despite a revision to the bond terms and issue size and two extensions of the subscription period, the bond offering was not fully subscribed, and it has now been terminated.

As previously reported, the company launched the $362 million bond offering on May 7. On May 20, it announced revised terms, reduced the issue size to $335 million and extended the subscription period to May 17. It later extended the subscription period to May 23.

Bridge facility

The company said it has received support for a three-month bridge facility that will give it enough time to finalize long-term funding. The bridge facility is expected to be at least $35 million.

The facility is supported by Scandinavian investors including key suppliers to the company, according to the news release.

The facility is subject to some conditions including bondholder approval. Northland expects the bondholder meeting to take place by the end of the week of May 26, and the company said it expects to have enough cash to fund operations until the meeting can take place.

Northland said its next shipment is scheduled for departure on May 30.

Bond terms

The proposed bonds were going to have a 15% interest rate, increased from 12%, and mature July 15, 2019.

The company was going to issue them at a 7% discount, resulting in $311.55 million of proceeds.

Investors who subscribed for the new bonds would have received warrants exercisable for 50% of the company's post-restructuring equity, increased from 14.2%.

The bondholders would have been given the right to nominate two board nominees, increased from one.

Arctic Securities ASA and Pareto Securities AS were the joint lead managers and bookrunners, and Ocean Equities Ltd. was co-lead manager.

Restructuring plan

The bond issue was part of the company's plan to obtain funding and restructure its existing bonds.

Under the company's restructuring plan as announced on April 29, the principal amount of the existing bonds would be retained in full on a second-lien basis in the group's post-restructuring capital structure.

Shareholders were set to vote on the restructuring at a meeting on June 4.

Previously, the company said that if shareholder approval were not received, the restructuring would be implemented by enforcement of a share pledge. This would result in Northland being owned and controlled by a new entity established for the benefit of the bondholders.

Northland is a Luxembourg-based producer of iron ore concentrate.

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